The Secret to Choosing the "Right" Charity:

Become an Informed Giver

According to the Independent Sector's latest figures, there are more than 1.9 million nonprofit organizations registered in the United States in support of everything from assisting the vulnerable and needy at home and throughout the world to supporting the arts and environmental causes. Despite the economic downturn, individuals contributed more than $200 billion in 2008 to these charities and others worldwide. For the millions of people who are inspired to donate money or volunteer their time this holiday season, the decision to give is usually an easy one. What is often more challenging is deciding our which organization to support. That's why, according to Amy Eldridge, Executive Director of Love Without Boundaries Foundation, the most important thing a potential donor can do is to become an "informed giver."

As director of Love Without Boundaries, a nonprofit humanitarian organization that assists orphaned and impoverished children in China, Ms. Eldridge is often asked about the process of evaluating and donating to charities. "I always tell people to give generously and to give from the heart," she says. "But I also tell them that they have to do their homework. That means making sure that the money you donate – no matter how large or small – will be used in the way you intend it to be used."

While Ms. Eldridge admits that there is really no "one size fits all" standard that can be applied to evaluate all charities, there are certain questions potential donors need to ask nonprofit organizations they are considering. These include:

What is the organization's overhead?

If a charity uses wording such as "sponsor a child," are they upfront about whether your donation will reach the actual child profiled?

Is the charity a "middle man" and, if so, who are they partnered with?

How does the charity handle donor restrictions?

Does the charity respect donor privacy?

Is the charity true to its mission statement?

What does a charity's financial reserves tell you – or not tell – you about the organization's "health" and long-term future?

Do your expectations of feedback from the agency match the agency's communication practices?

She also explains how to use independent sources, such as Charity Navigator and third party endorsements to verify a charity's track record.

Ms. Eldridge stresses that the popularity and thoroughness of the Internet as a search tool offers new opportunities, as well as unique challenges for potential philanthropists. "The Internet provides a great tool for people to locate charities that align with their interests and read donor feedback about agencies. But it also opens the door to greater fraud potential; so donors must be aware and beware.”

“There is no greater investment an individual can make than assisting those in need,” Ms. Eldridge says. “Protect your investment. Ensure that your contributions benefit the people or cause you want to support. Be an informed giver.”